Some good reasons why the poor are realizing they have to learn to play the game of finance...

The way things happen in the world we live in is increasingly determined by money.  The power of money is nothing new, but never before has it held sway so thoroughly over so many aspects of our lives, our environments, our relationships and our perceptions of what is right and wrong:  everything nowadays has a price.  You can call it capitalism or the market system or greed, but like it or not, the power of money is the defining factor of our age.

And what's happening is that more and more capital - and the power that goes with it - is accumulating in a smaller and smaller number of hands:  in gigantic corporations, in the pockets of the super-wealthy and in increasingly centralized government systems.  It's way up there, not down here.  These few hands are setting the agenda, making the plans and determining what shape development will take, and then passing the budget down the line accordingly.      

All this financial flow keeps things dynamic, of course, but the problem is that almost none of it is making its way down to the ground - to the poor, who keep getting pushed around and manipulated by whatever projects and programs this finance foists on them. 

The more our governments and development institutions say, "We're going to alleviate that poverty" the more they spend on programs that just eat up that finance in management, in overheads, in junketing and in all manner of contingencies, so that very little actually reaches the people whose poverty is supposed to be getting alleviated.  And when little scraps of finance do actually reach the ground, the poor are almost never allowed to manage it, to say what they would like to do with it or even to touch it. 

That's why the big problems of poverty like land, housing, income and welfare never get solved.  Unless poor people can learn how to use the tool of finance, they'll keep getting walked over by the much bigger and more powerful forces in government, in the private sector and in development agencies that are calling the shots today. 

. . . And why community savings and credit and community development funds go together

Why are community savings and credit and development funds so important?  Because these are forms of finance that start growing from the ground, from people's own resources, instead of trickling down to them in stingy driblets from some bogus poverty alleviation program or other.  And when finance grows up from the ground like this, people can begin to think for themselves what they'd like to do - and then do it.  Even if it starts very modestly, this kind of finance system within poor communities has the power to gather people together and to allow them to start doing things, because it is finance that they manage themselves.  This is the trickle-up method. 

Savings and credit is the first layer.  Then, when a community's saving has brought them together, built their confidence, their management skills, their collective strength and their own internal fund, they are ready for the second layer, which is the development fund.  The job of the development fund is to pump additional resources into this people's finance system (through loans or grants, and with a certain direction), which is now prepared and ready to handle them.  This extra financial resource greatly expands people's space to create, to develop and to negotiate.  It allows them to speed up and scale up their problem-solving initiatives and to push beyond the limited capacity of their internal savings, which by itself would allow them to move forward only very, very slowly. 

Community savings and development funds go together.  Growing numbers of poor communities are realizing that as long as the control over money is always in someone else's hand, so will the fate of their land and houses and communities and livelihoods always be tossed around by the power of someone else's money and some bigger fish's investments.  And they are increasingly making money - and the control over their own internal resources and outside development resources - the fundamental tool in their process of bringing about change in their cities and reclaiming their power over their lives and communities.  

 

SAVINGS AND FUNDS AND LAND AND HOUSING

There is probably no issue of poverty which better illustrates the power of this community-managed finance system than housing.  In most places, if poor people have to wait to get their land and build their housing only after they've saved the whole cost, it will take them ten or twenty years.  And by then rising construction costs and land values will have made the whole project impossible anyway.  But when people have their savings groups and their development funds, they can plan and build their housing right here and now.

In this issue:

Thoughts on Community Funds - Strategies for the Poor.

We look at Community Funds with ACHR
Sri Lanka

Thailand
Cambodia
Philippines
Nepal
Vietnam
Lao PDR
Mongolia
Indonesia
Fiji

And SDI in
India
Sri Lanka
South Africa

 

"One community dollar equals a thousand development dollars.  Why?  Because that community dollar represents the commitment of thousands of poor people to their own development.  Without the direct commitment of a savings scheme, people can participate in any kind of development freebie that comes along.  But when development comes from people's own savings, it's theirs, they own it.  Without this, development and improvements have no meaning." 
Jockin Arputham,
SDI / National Slum Dwellers Federation, India

 

 

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